Mop and Broom Manufacturing is evaluating whetherto produce a new type of mop. Th e company is consideringthe operations requirements for the mop as well as the marketpotential. Estimates of fi xed costs per year are $40,000, and thevariable cost for each mop produced is $20.(a) If the company sells the product at a price of $25, howmany units of product have to be sold in order to breakeven? Use both the algebraic and graphical approaches.(b) If the company sells 10,000 mops at the product price of$25, what will be the contribution to profi t?
Customary Pricing
There are various types of pricing strategies followed in the market. They are psychological pricing, odd pricing, free onboard pricing, customary pricing, prestige pricing, dual pricing, ruling pricing, negotiated pricing, mark up pricing, etc. each one can be explained as follows:
Multiple Unit Pricing
“Multiple-unit pricing is a practice where a company offers consumers a lower than unit price if a specified number of units are purchased.”
Mop and Broom Manufacturing is evaluating whether
to produce a new type of mop. Th e company is considering
the operations requirements for the mop as well as the market
potential. Estimates of fi xed costs per year are $40,000, and the
variable cost for each mop produced is $20.
(a) If the company sells the product at a price of $25, how
many units of product have to be sold in order to break
even? Use both the algebraic and graphical approaches.
(b) If the company sells 10,000 mops at the product price of
$25, what will be the contribution to profi t?
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